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Author: E. John Wagner, II

IRS Expands Cancellation of Indebtedness Income Exclusion

February 13, 2014 Cancellation of Indebtedness Income

When a lender discharges debt for less than full consideration, the borrower by default recognizes income for federal income tax purposes. “Qualifying Real Property Indebtedness” is an exception. Forgiveness of Qualifying Real Property Indebtedness may be excluded from income. New IRS guidance expands this exclusion. The Qualifying Real Property Indebtedness…

IRS Proposed Regulations Limit Tax-Free Contributions and Distributions of Leveraged Property to and from Partnerships, Reduce Partnership Deduction Allocation Flexibility

February 3, 2014 Capital Gain Transactions

On January 30, IRS proposed income tax regulations reducing flexibility to allocate partnership deductions. The regulations also limit tax-free contributions and distributions of leveraged property, including mortgaged real estate, to and from partnership entities. The taxation of partnerships and many LLCs could change. Old transactions are not permanently grandfathered. Pre-existing…